The dispute is taking place against the backdrop of a competing plan by big media companies Disney, Fox and Warner Bros Discovery to launch a streaming video joint venture devoted to sports, called Venu Sports. — Reuters
LOS ANGELES: What began as routine haggling over the rates satellite TV provider DirecTV would pay to distribute Walt Disney’s television networks is turning into a referendum on the future of bundled programming, executives and experts say.
DirecTV’s current public battle with Disney has led to 11 million DirecTV customers losing access to ESPN in the middle of the US Open tennis tournament and a week before the New York Jets are scheduled to meet the San Francisco 49ers on Monday Night Football.
The dispute is taking place against the backdrop of a competing plan by big media companies Disney, Fox and Warner Bros Discovery to launch a streaming video joint venture devoted to sports, called Venu Sports.
The service, which had been scheduled to debut in August, would combine the breadth of the media companies’ live sports programming.
The launch was temporarily blocked by a court injunction as part of a lawsuit filed by sports streaming rival FuboTV accusing the media companies of anticompetitive behaviour.
“This is not a run-of-the-mill dispute. This is not the kind where people are haggling over percentage points on the rates,” DirecTV chief financial officer Ray Carpenter said on Tuesday.
“This is really about changing the model in a way that gives everyone confidence that the industry can survive.”
DirecTV sought changes in its offerings to cater to consumer tastes in the streaming TV era as part of a new multi-billion US dollar licencing agreement.
It pressed Disney to allow it to sell smaller, lower-priced packages, including tiers without ESPN for customers who do not watch sports.
“DirecTV continues to misrepresent the facts around our ongoing negotiations,” according to a statement issued by Dana Walden and Alan Bergman, co-chairmen, Disney Entertainment, and Jimmy Pitaro, chairman, ESPN.
“Our priority is to reach a marketplace deal that serves the needs of DirecTV and their customers while also recognising the value of our top-quality content and the significant investment required to create and acquire it.”
DirecTV chief content officer Rob Thun told CNBC Wednesday the dispute is not over rates, but rather the conditions Disney has attached to the “skinnier” bundles of programming.
Distributors like DirecTV and programmers such as Disney have bickered for decades over rates as the cost of television packages have soared.
What has helped prop up the TV industry is the decades-old practice of “bundling”, or requiring pay TV distributors to pay for and carry less-viewed networks, such as Freeform, to gain access to the prized programming of ESPN.
Contractual terms also specify how broadly a distributor makes this content available to its subscribers.
Sports have historically provided a bulwark against the decline of the pay TV industry, continuing to attract viewers even as cable and satellite TV distributors shed subscribers.
But as viewers migrate to streaming, sports has followed. Marquee events, such as the just-ended Olympics, have moved to streaming, along with professional sporting contests from the National Football League and the National Basketball Association.
Venu threatens to further accelerate the decline of pay TV.
“A successful launch of Venu could have spelled the death blow to the traditional linear pay TV bundle,” wrote MoffettNathanson’s Craig Moffett. — Reuters
